09:17 AM EST, 02/03/2025 (MT Newswires) -- Oil prices were sharply higher early on Monday after Donald Trump imposed 10% tariffs on energy imports from Canada, the largest source of U.S. oil imports, and 25% tariffs on other imports from the country and Mexico, roiling global markets and launching an international trade war.

West Texas Intermediate crude for March delivery, the U.S. benchmark, was last seen up US$1.90 to US$74.43 per barrel, while April Brent crude was up US$1.31 to US$76.98.

Trump on the weekend imposed 25% tariffs on imports from Canada and Mexico, but lowered the levy to 10% on Canadian oil imports. Canada supplies more than four-million barrels per day of oil to the United States, about 20% of daily demand. The U.S. imports less than 500,000 bpd from Mexico, down from about 1.25-million bpd a decade ago. Imports from China also face a 10% levy.

"Out of all the places that the Trump administration could have shown restraint, Canadian energy was likely the optimal choice. Looking at the potential profitability impact scenarios ... a 25% tariff on energy imports would have likely been enough pressure on profitability that physical disruption would have been highly likely. At 10%, pricing offsets are more manageable, and likely will not require a significant overhaul to physical flows," Helima Croft, Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, noted.

Both Canada and Mexico have imposed retaliatory tariffs on imports from the U.S. and will join China in an appeal to the World Trade Organization to seek redress for the U.S. action. But the Trump Administration's moves are upsetting global markets and forcing prices higher for U.S. consumers.

The imposition of the tariffs comes as OPEC+ holds a previously scheduled ministerial meeting. The group is expected to stick with plans to begin returning 2.2-million barrels of voluntary production cuts with monthly supply increases of 122,000 bpd beginning in April. However, the U.S. moves are likely to roil international markets and challenge the cartel's management of international prices.

"OPEC+ is facing a new challenge with President Trump's tariffs on major crude suppliers, which could disrupt global oil demand and production. While the group may unwind its production cuts as announced in the second quarter to manage market stability, tariffs on Canada and Mexico could force both countries to redirect crude, impacting US refineries and leading to potential price hikes. OPEC+ is likely to act cautiously, balancing its efforts to stabilize prices while also dealing with geopolitical tensions," Mukesh Sahdev, Global Head of Commodity Markets at Rystad Energy, noted.